Quest Diagnostics 2010 Annual Report Download - page 31

because of, among other things, entrenched patterns of clinical practice or uncertainty over third party
reimbursement. We cannot state with certainty when or whether any of our medical diagnostic products under
development will be launched, whether we will be able to develop, license or otherwise acquire products, or
whether any diagnostic products will be commercially successful. Failure to launch successful new products or
new indications for existing products may cause our products to become obsolete.
Our operations may be adversely impacted by the effects of natural disasters such as hurricanes and
earthquakes, health pandemics, hostilities or acts of terrorism and other criminal activities.
Our operations may be adversely impacted by the effects of natural disasters such as hurricanes and
earthquakes, health pandemics, hostilities or acts of terrorism or other criminal activities. Such events may result
in a temporary decline in the number of patients who seek clinical testing services or in our employees’ ability to
perform their job duties. In addition, such events may temporarily interrupt our ability to transport specimens, to
receive materials from our suppliers or otherwise to provide our services.
Our business could be adversely impacted by CMS’ adoption of the new coding set for diagnoses.
CMS has adopted a new coding set for diagnosis, commonly known as ICD-10, which significantly expands
the coding set for diagnoses. The new coding set is currently required to be implemented by October 1, 2013.
We may be required to incur significant expense in implementing the new coding set, and if we do not
adequately implement it, our business could be adversely impacted. In addition, if as a result of the new coding
set physicians fail to provide appropriate codes for desired tests, we may not be reimbursed for such tests.
Our business could be adversely impacted by CMS’ adoption of new coding for molecular genetic tests.
In October 2010, the American Medical Association CPT Editorial Panel approved 27 new analyte specific
codes (and will consider additional codes in 2011) to describe several molecular genetic tests that currently
require multiple CPT codes for billing purposes. The new codes could replace the current codes for payers,
including Medicare, beginning January 1, 2012. Reimbursement levels for the new codes have yet to be
determined. If reimbursement levels for the new codes do not recognize the value of the molecular genetic tests,
our revenues and earnings could be adversely impacted.
Adverse results in material litigation could have an adverse financial impact and an adverse impact on our
client base and reputation.
We are involved in various legal proceedings arising in the ordinary course of business including, among
other things, disputes as to intellectual property, professional liability and employee-related matters, as well as
inquiries from governmental agencies and Medicare or Medicaid carriers regarding billing issues. Some of the
proceedings against us involve claims that are substantial in amount and could divert management’s attention
from operations. The proceedings also may result in substantial monetary damages, as well as damage to our
reputation, and decrease the demand for our services and products, all of which could have a material adverse
effect on our business. We do not have insurance or are substantially self-insured for a significant portion of any
liability with respect to such claims. The ultimate outcome of the various proceedings or claims could have a
material adverse effect on our financial condition, results of operations or cash flows in the period in which the
impact of such matters is determined or paid.
If we fail to comply with the requirements of our Corporate Integrity Agreement, we could be subject to
suspension or termination from participation in federal healthcare programs and substantial monetary
penalties.
As part of a settlement with the U.S. Department of Justice and other federal government agencies, in April
2009 we entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human
Services Office of Inspector General. If we fail to comply with our obligations under the Corporate Integrity
Agreement, we could be suspended or terminated from participating in certain federal healthcare programs and
subject to substantial monetary penalties.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
Some statements and disclosures in this document are forward-looking statements. Forward-looking
statements include all statements that do not relate solely to historical or current facts and can be identified by
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